Bpcl Joins Consortium To Supply Lng
Bharat Petroleum Corporation Ltd, (BPCL), has joined the three-member public sector consortium to supply liquefied natural gas (LNG) to power companies in the country.
The consortium will form a separate company for this purpose.
This marks the refining major's, (1995-96 gross turnover: Rs 14,822.7 crore) entry into the LNG market where several domestic and multinational companies have already announced major plans.
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The three-member consortium was floated earlier this year by Oil and Natural Gas Corporation, (ONGC), Gas Authority of India Ltd, (GAIL), and Indian Oil Corporation, (IOC).
Last month, the BPCL board had given the final go-ahead for its participation in the project.
The ministry of petroleum and natural gas had cleared the formation of a separate company for this purpose sometime back.
Top BPCL sources said a new company, with a separate equity structure and a full board of directors, will be formed within the next two months. Currently, the four partners are working in a consortium which is being coordinated by Gas Authority of India Ltd. All four companies will hold 12 per cent in the new company and the rest will be held by foreign companies, public and financial institutions.
The consortium had invited bids from foreign companies to participate in the project and 17, including, Royal Dutch Shell, Mobil, Enron and British Gas had shown interest. The consortium has already identified Ennore, near Chennai in Tamil Nadu and Mangalore in Karnataka as sites for setting up LNG terminals. Both will have capacity to handle and import around 2-2.5 million tonnes of lique fied natural gas.
The total project cost is estimated at around Rs 4,000 crore. The debt-equity ratio has been pegged at 1.5:1. BPCL officials estimate that their contribution to the venture will be between Rs 150-200 crore. BPCL is the last of the three public sector refining majors to enter the LNG line. HPCL had last year announced the formation of a joint venture with Total S A of France to import and distribute LNG. IOC was the original founders of the consortium.
BPCL sources said the company was initially planning to enter into the supply of LNG on its own.
But the huge capital cost forced a rethink and they decided to join the consortium to share the burden and spread the risk. The terminals are likely to come up in the western and southern coasts as coal, the main competitor, is not abundant there.
Most power plants in this region would prefer using LNG as transport and supply of coal over long distances would prove costly. Tie-ups would be forged with foreign companies for the import of LNG once the consortium completes processing the bids.